State and Local Public Policy from the Mercatus Center

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Saving Flint

According to a recent article in the British Telegraph, Flint, Michigan once had 79,000 workers for General Motors and now has 8,000. The population of the city has fallen from 200,000 to 100,000. The unemployment rate is 20%. Young people are leaving in droves in search of jobs and better prospects elsewhere. Large parts of the city are emptying out, leaving at least 4,000 abandoned homes. Although the city has demolished 1,000 of them, 3,000 remain standing. Whole neighborhoods are crumbling rapidly.

So what to do? The normal political response is to take public actions to “save” places like Flint. The urban renewal programs 50 years ago were designed to arrest the decay of older American cities such as St. Louis and Detroit – typically built in the nineteenth century and with decaying housing stock and outmoded land use patterns based originally on streetcar systems of transportation. Many federal billions were spent in futile efforts to reverse the market verdict, reflecting a refusal to accept that these old city neighborhoods were outmoded and their highest value economic use was as cheap housing for poor people. A “slum” was a pejorative term in those days for old housing – in many cases not all that bad structurally – that people with lower incomes could afford. But for American politicians, every part of every city should be thriving. If not, the government had to do something.

Reflecting the failures of past programs to “revitalize” the inner cities, the Brookings Institution now identifies 50 cities, most of them in the industrial “rust belt,” that need to shrink significantly to survive. After decades of failed efforts to halt downward economic forces, there has been a new acceptance that some American cities simply must get smaller. Facing its dire problems, city planners in Flint have finally come to accept this. The current economic crisis and the large number of foreclosures emphasize the need to rethink urban strategies that automatically assumed upward growth for every city.

One Brookings study proposes that the government adopt a program of “land banks” – government would acquire the land in old declining neighborhoods and then turn it over for redevelopment. It sounds unfortunately like of the thinking that was on exhibit in New Haven, Connecticut, leading to the Kelo Supreme Court case.

A much better approach would be to leave redevelopment to be determined in the market by the collective actions of property owners in a neighborhood area and land developers. Property owners could be facilitated in organizing a collective land bargaining association that would then solicit developer bids for the whole neighborhood. If a high enough bid was forthcoming, and if a large supermajority of property owners – say, 80 percent – voted to accept the offer, the neighborhood would be turned over to the private developer. A whole new neighborhood land uses compatible with present day market economics would result. It is possible that in places like Flint, a few neighborhoods might even be turned back to urban farming of high value local products. Whatever the result, market forces rather than urban planners would decide.